NRG Energy and Constellation Energy rallied on September 4 even as the S&P 500 slipped, as investors kept betting on companies that can deliver power for AI data centers. Both firms posted contract wins and raised guidance, but hedge fund positioning in the two stocks diverged over the second quarter.
NRG Energy gained 6.4% and Constellation Energy rose 4.9% on September 4, even as the S&P 500 fell 0.4%.
The moves fit the broader AI-power trade, in which data-center projects increasingly depend on generators that can add reliable capacity, navigate interconnection queues, and sign contracts before construction begins.
NRG bets on speed
NRG is advancing a Bring Your Own Power strategy with a hyperscaler for a 1.2-gigawatt combined-cycle gas project in Texas. It also brought a 415-megawatt facility into commercial operation and reported $1.03 billion of second-quarter free cash flow before growth investments. Pairing contracted data-center load with dispatchable generation can bypass part of the grid bottleneck, but the company still carries project execution, fuel exposure, and financing risk, plus the possibility that forecast load never materializes.
Insider Monkey counted 59 hedge funds holding NRG at June 30, down from 76 at March 31. Millennium Management nevertheless disclosed 4,257,712 shares, 115% more than in the first quarter. The gap between a falling fund count and one manager building a larger position argues against treating institutional sentiment as uniform.
Constellation raises guidance
Constellation brings the largest U.S. nuclear fleet plus gas assets acquired with Calpine. It raised full-year adjusted operating EPS guidance to $11.50 to $12.50 and signed another 920 megawatts of long-term power agreements. Its bull case rests on scarce round-the-clock clean generation, while plant outages, regulatory intervention, integration risk, and the danger of overpaying to expand capacity during a demand boom remain the bear case.
Seventy-three hedge funds held Constellation in the second quarter, down from 79 in the first. Coatue Management disclosed 4,632,475 shares at quarter-end, though the available data does not show a usable sequential change, so no motive or timing can be inferred.
Short interest stays modest
NRG's August 14 short-interest settlement showed 6,112,901 shares sold short, equal to 2.91% of float, with 1.58 days to cover — not a crowded structural hedge. NRG offers faster gas-backed development and strong cash flow, while Constellation offers differentiated nuclear supply and longer-duration contracting, and both must protect customer affordability alongside project returns.
Friday's rally recognizes that compute needs power, but signed contracts, delivered megawatts, and after-tax returns will determine whether the power premium lasts. Grid rules and permitting timelines remain variables that neither company's demand forecast can control, and contracted load alone is not enough if construction costs outrun protected earnings or regulators resist customer-specific grid arrangements.
Source: Insider Monkey
Trading involves risk.
Risk Disclaimer
